Official Development Assistance (ODA) is rising, but only slowly, according to an OECD report prepared for the conference on Financing for Development in Doha.
In 2007, the Development Assistance Committee (DAC) members’ total net ODA was USD 103.5 billion, representing a real increase of 2% over 2006, once debt relief is excluded. This is, however, well below the rate of growth needed to meet the commitments made by DAC donor countries.
Aid to Africa rose by 12 per cent from 2006 to 2007. This is the first indication that the donor commitments to Africa are finally coming through. This growth must continue – and indeed increase further to around 17 percent each year in 2008, 2009 and 2010 – if commitments to Africa are to be met.
G8 members promised to increase aid when they meet in Gleneagles in 2005. They quoted OECD estimates that their commitments, combined with those of other donors, would increase total aid by USD 50 billion by 2010.
These projections can only be met if countries give more; an additional USD 34 billion in 2007 dollars needs to be programmed into donors’ aid budgets by 2010.
The global crisis is hitting export revenues and flows of private investment, remittances and other financial inflows to developing countries. Many of the world’s poor, especially in Africa, have already suffered from steep oil and food price rises.
“The OECD forecasts that in 2009 the US economy will contract by 0.9%, the Euro area by 0.6% and Japan by 0.1%. This will put pressure on donor aid budgets. But we must not make the mistakes of the 1990s, when aid budgets were drastically cut after the recession.”, said Eckhard Deutscher, Chair of the OECD Development Assistance Committee. Between 1992 and 1997, DAC ODA fell by one-third as a share of national income, the equivalent of USD 30 billion today.
To help ensure that the financial crisis does not create a development crisis, DAC donors have joined in an Aid Pledge – initiated by OECD - reaffirming the aid commitments they made at Gleneagles and elsewhere and agreeing to maintain aid flows consistent with them.
Deutscher warns, “Aid is a critical investment and donors must continue to scale up. Spending to boost agricultural production and improve social and economic infrastructure can avoid much greater expenditure later to counter human and natural catastrophes."
The full report is available at: www.oecd.org/dac/stats/oda2007